End of Act One: Tuition Fees and the Ongoing Challenge of Fiscal Consolidation in the UK

The votes in the House of Commons on 9 December 2010 on raising the limit for University tuition fees in the UK to £9,000 from 2012 were about more than ‘just’ the future structure of Higher Education in this country. Indeed, and notwithstanding the rights and wrongs of the issue for a moment (for this, the reader is referred to the contribution on this blog by our student Horatio Georgestone), the political dispute and popular mobilisation against this reform provides a useful indication of how British politics is likely to operate over the remainder of this parliament. For the reform of tuition fees represents only the opening gambit in the coalition government’s masterplan for consolidating the UK’s record budget deficit. The Comprehensive Spending Review (CSR) of 20 October 2010 presented this plan in summary form only; now and in the coming months, the detail must be fleshed out so that these overall goals can be translated into policy practice.

A number of conclusions can be drawn from the events of the past month.

1. There is a clear disconnect between the abstract recognition by voters that the deficit must be tackled and their acceptance of the concrete implications that follow this, either in terms of raising tax revenue or cutting public expenditure. As such, this disconnect is hardly surprising, not least because of the inevitable time lag between setting out the strategy for consolidation, and the moment when individual measures start to ‘bite’. But this creates major political challenges, both of substance, as voters realise that tax rises and cuts to public expenditure will affect them directly and sharply, and of communication.

2. This challenge of substance and communication is exacerbated by the fact that the CSR is at least in part driven by an abstract commitment on the part of the government to a small state and competition. Thus, the coalition government has chosen to address the deficit by finding three times more through expenditure savings than through raising taxes: it could of course have set this balance differently. But significantly, by the end of the consolidation process, the size of the state is set to fall below 40 per cent of GDP for the first time in decades. Equally, the HE reforms are also driven inter alia by the desire to introduce market-driven competition into a sector hitherto not characterised by this; indeed, cost savings appear not to have been the primary motivation, with the government admitting that it does not expect there to be overall long-term savings in this area.

3. The degree of public reaction to specific cuts is likely to be shaped by the degree of organisation of the interest groups active in the respective fields. For instance, the very existence of the NUS (and the fact that in Aaron Porter it has a telegenic and urbane President) helped to galvanise and marshal opposition to the government’s plans. The same level of interest organisation is not present in some other sectors (such as social housing), and so expenditure cuts here may be easier to implement. On the other hand, considerable savings are also due to be imposed on policing, and here the government will be up against very well organised interests, who moreover have a positive public image. It will be interesting to see how they fare.

4. The tuition fees controversy also shows that governments find it hard not to ‘cherry pick’ from the recommendations of non-partisan review bodies. Whether one agrees with or not, the Browne Review developed a holistic approach to University funding, and its proposals were compromised in key areas by the coalition for political reasons. What is more, in the final run-up to the vote, the government offered last-minute concessions (for instance that students from low-income families could have one or two years’ free tuition) to appease potential rebels. Such amendments are rarely well-thought out and generally create further problems which then simply have to be revisited at a later stage.

5. The government now has a number of backbenchers who have rebelled. Experience shows that once MPs who go against the party line once are more likely to do so again, and this may prove an increasingly irritating thorn in the government’s side

But more than anything, the tuition fees episode underlines that the process of fiscal consolidation is both messy and politically bloody. The government has already expended considerable energy and political capital in order to have its way with this issue, and perhaps its biggest challenge of all is to find the resolve to stick to its plans against what is likely to be growing opposition. After all, it is still over four years until the next general election, and that really is an awful long time in politics.